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A secure financial future is a dream for all.
Financial security will let you cherish each moment with your loved ones.
PNB MetLife has come up with a Guaranteed Savings Plan, which helps you to accumulate a corpus to achieve your short-term to long-term goals as per your choice along with life cover to protect your loved ones in your absence.
Will this plan really give you a Safe, Happy & Financially Secure Future as it claims to be?
Let us find out by understanding and analyzing the policy in detail.
Table of Contents:
1.) What is the PNB MetLife Guaranteed Savings Plan?
2.) Features of the PNB MetLife Guaranteed Savings Plan
3.) Policy at a glance: PNB MetLife Guaranteed Savings Plan
4.) Benefits of the PNB MetLife Guaranteed Savings Plan
5.) Additional Benefits of the PNB MetLife Guaranteed Savings Plan
6.) Free look-up period of the PNB MetLife Guaranteed Savings Plan
7.) The grace period, Discontinuance (Lapse) & Revival of the PNB MetLife Guaranteed Savings Plan
8.) Surrendering the PNB MetLife Guaranteed Savings Plan
9.) Advantages of the PNB MetLife Guaranteed Savings Plan
10.) Disadvantages of the PNB MetLife Guaranteed Savings Plan
12.) IRR of the PNB MetLife Guaranteed Savings Plan
13.) PNB MetLife Guaranteed Savings Plan Vs Other Investments
14.) PNB MetLife Guaranteed Savings Plan Vs. PPF Vs. ELSS
What is the PNB MetLife Guaranteed Savings plan?
PNB MetLife Guaranteed Savings Plan is an individual, Non-linked, Non-Participating, Savings, Life insurance plan.
This plan helps to accumulate corpus to fulfill your dreams in the short or long run. This plan gives live cover for the entire policy term. It offers guaranteed benefits, which include Guaranteed Additions on cumulative premiums. This policy claims your dreams are protected as the benefits are guaranteed.
Features of the PNB MetLife Guaranteed Savings Plan:
- Flexibility in choosing the premium paying term – 5, 7, 10 years
- Premium payment mode – Annual, Half yearly, or Monthly.
- Life cover for the entire policy term & Death benefit payable as Lumpsum.
- Guaranteed Additions will be added at the end of each Policy Year during the Premium Payment Term.
Policy at a glance of the PNB MetLife Guaranteed Savings Plan:
Let us look at the eligibility criteria to get a basic idea about the policy below;
| Premium Paying Term (years) | 5 Pay | 7 Pay | 7 Pay | 10 Pay |
| Policy Term (years) | 10 | 12 | 15 | 20 |
| Minimum age at entry (years) | 8 | 6 | 3 | 3 |
| Maximum age at entry (years) | 60 | |||
| Maximum age at Maturity (years) | 70 | 72 | 75 | 80 |
| Minimum annual premium | 46480 | 24970 | 21068 | 14178 |
| Maximum annual premium | As per Board approved underwriting policy | |||
| Minimum Sum assured | 400000 | 200000 | 200000 | 150000 |
| Maximum Sum Assured | As per Board approved underwriting policy | |||
| Multiple of premium | Age at entry more than 45 years – 7X or 10X
Less than 45 years – 10X |
|||
| Premium payment mode | Annual, Half-yearly, Monthly | |||
Benefits of the PNB MetLife Guaranteed Savings Plan:
Maturity Benefit:
On survival of the Life Assured till the end of the policy term, Sum Assured on Maturity plus accrued Guaranteed Additions will be paid, provided all due premiums have been received.
Sum Assured on Maturity:
| Premium Payment Type | 5 Pay | 7 Pay | 10 Pay |
| Sum Assured on Maturity (% of Basic Sum Assured) | 70% | 100% | 130% |
Guaranteed additions:
Guaranteed Additions will be added at the end of each Policy Year during your Premium Payment Term provided all the due Premiums have been received for that Policy Year.
Guaranteed Additions = Guaranteed Addition rate X Sum of all premiums received to date.
| Premium Paying Term (years) | GA applied to cumulative premiums at the end of each policy year, only during Premium Payment Term |
| 5 Pay | 5% |
| 7 Pay | 7% |
| 10 Pay | 10% |
Death benefit:
2 multiples can be chosen at the inception of the policy and they cannot be changed during the term of your policy.
| Age at entry | Multiple Annual Premium applied |
|---|---|
| 45 years and above | 7x or 10x |
| Less than 45 years | 10x |
The nominee shall receive Sum Assured on Death plus accrued Guaranteed Additions as on the date of death of the policyholder.
Sum Assured on Death is the highest of;
- Annualised Premium x Multiple of Annual Premium, as per the Multiple Option chosen
- 105% of the total premiums paid up to the date of death.
- Basic Sum Assured (BSA).
Additional Benefits of the PNB MetLife Guaranteed Savings Plan:
Flexible premium payment modes & modal factors:
| Premium Paying Mode | Modal Factors |
| Half Yearly | 0.5131 |
| Monthly | 0.0886 |
Riders:
- PNB MetLife Accidental Death Benefit Rider Plus (UIN: 117B020V03)
- PNB MetLife Serious Illness Rider (UIN: 117B021V03)
Loans:
Once the policy has acquired a Surrender Value, you can take a loan against the policy.
The maximum amount that can be availed is 90% of the Special Surrender Value.
Free look-up period of the PNB MetLife Guaranteed Savings Plan:
If the policyholder is not satisfied with the terms & conditions of the PNB MetLife Guaranteed Savings Plan, then it can be returned/cancelled.
The policyholder will get a refund of the premium after the charges are deducted.
The free look period is 15 days from the date of receiving your policy if the policy is purchased directly. It will be extended up to 30 days in case it was purchased in distance mode.
You have the right to cancel the Policy by providing written notice within 15 days for the normal mode or 30 days for distance mode. The premium you paid will be refunded.
The grace period, Discontinuance (Lapse) & Revival of the PNB MetLife Guaranteed Savings Plan:
Grace period:
The grace period for payment of the premium is 15 days, in case the policyholder pays the premium on a monthly and it will be extended up to 30 days in all the other cases.
Discontinuance:
If the premiums for the first two years are not paid in full by the policyholder, the policy lapses at the end of the grace period, and the risk cover, and rider benefits, if any, will cease immediately.
You have the option to either surrender your policy or continue it as a Paid-Up policy with reduced benefits.
The death benefit & Maturity benefit is reduced proportionately to the premium paid by you so far.
Revival:
You can revive your lapsed / Paid-up policy and the riders for its full coverage within five years from the due date of the first unpaid premium.
By paying all outstanding premiums together with interest and/or late fees, your policy can be revived.
Once the policy has been revived, all the benefits will be restored to their full value.
Surrendering the PNB MetLife Guaranteed Savings Plan:
If all premiums have been paid for at least two consecutive years of the PNB MetLife Guaranteed Savings Plan, your policy shall acquire a guaranteed surrender value.
If you choose to discontinue your Policy, you will be entitled to the Surrender Value, which is higher than the Guaranteed Surrender Value (GSV) or Special Surrender Value (SSV) of the policy.
Advantages of the PNB MetLife Guaranteed Savings Plan:
- Non-linked & non-participating policy so the returns are guaranteed.
- Flexibility in the premium paying term & mode.
- As GA is calculated, the cumulative premium (generally calculated on annualised premium) will boost the maturity value.
- Liquidity can be met through the loan option.
- Tax benefit as per Sec 80 C & Sec 10 (10D) of Income Tax Act.
Disadvantages of the PNB MetLife Guaranteed Savings Plan:
- The lock-in period is 2 years (For loan & Surrender)
- Guaranteed additions & other benefits are high only for a high Sum Assured & policy with a longer-term period.
You can read the PNB MetLife Guaranteed Savings Plan brochure for further details.
Research Methodology:
Now, we have seen all the necessary details that we need to know about the PNB MetLife Guaranteed Savings Plan.
Let us do an in-depth analysis to gauge whether this plan can act as a long-term sustainable investment or not by calculating the IRR of the PNB MetLife Guaranteed Savings Plan.
Then let us compare PNB MetLife Guaranteed Savings Plan with other alternate investments to see which gives us a better return in the long term.
IRR of the PNB MetLife Guaranteed Savings Plan:
Let us calculate the IRR of the PNB MetLife Guaranteed Savings Plan by using an illustrative example, which is given below:
Let us assume the policyholder who is a 35-year-old Male takes up the policy with a;
| Premium paying term | 10 |
| Policy term | 20 |
| Basic Sum Assured | 5,56,917 |
| Annual premium | 50,000 |
| BENEFITS | AMOUNT (RS.) |
| SUM ASSURED ON MATURITY (130% OF BASIC SUM ASSURED FOR 10 PAY) | 7,23,992 |
| ACCRUED GUARANTEED ADDITIONS | 2,75,000 |
| TOTAL | 9,98,992 |
| Age | Year | Annualised premium / Maturity benefit | Sum assured |
|---|---|---|---|
| 31 | 1 | -50,000 | 5,56,917 |
| 32 | 2 | -50,000 | 5,56,917 |
| 33 | 3 | -50,000 | 5,56,917 |
| 34 | 4 | -50,000 | 5,56,917 |
| 35 | 5 | -50,000 | 5,56,917 |
| 36 | 6 | -50,000 | 5,56,917 |
| 37 | 7 | -50,000 | 5,56,917 |
| 38 | 8 | -50,000 | 5,56,917 |
| 39 | 9 | -50,000 | 5,56,917 |
| 40 | 10 | -50,000 | 5,56,917 |
| 41 | 11 | 0 | 5,56,917 |
| 42 | 12 | 0 | 5,56,917 |
| 43 | 13 | 0 | 5,56,917 |
| 44 | 14 | 0 | 5,56,917 |
| 45 | 15 | 0 | 5,56,917 |
| 46 | 16 | 0 | 5,56,917 |
| 47 | 17 | 0 | 5,56,917 |
| 48 | 18 | 0 | 5,56,917 |
| 49 | 19 | 0 | 5,56,917 |
| 50 | 20 | 0 | 5,56,917 |
| 51 | 21 | 9,98,992 | |
| IRR | 4.51% |
In the case of this traditional endowment policy,
The IRR works out to be around 4.51%, which is very low even compared to your Bank FD rate of Interest.
Though the returns are guaranteed, the returns on your investment in this policy are not inflation-beating returns.
PNB MetLife Guaranteed Savings Plan VS Other Investments:
As an alternative to the PNB MetLife Guaranteed Savings Plan, you can invest the money in other alternate investments that can give you a better investment return.
If you are planning to go for a risk-free investment, you can choose PPF for the long term. If you feel that your risk tolerance is higher, then you can choose ELSS as a long-term investment option.
There are also many other options available for sustainable investments in the long run.
Let us explore the alternates and compare their IRR with the PNB MetLife Guaranteed Savings plan in a detailed analysis.
PNB MetLife Guaranteed Savings Plan Vs. PPF Vs. ELSS:
In order to have an inflation-beating return, we can look into other investment vehicles.
Let’s assume that we invest the same amount annually in two products.
One in pure term insurance for life cover & invest the balance in other investment products such as PPF and ELSS to accumulate wealth.
We have assumed a pure term policy with a sum assured of Rs. 5.5 lakhs for a 20-year policy term & the premium paying term is for 10 years.
Generally, a pure term policy is recommended with a higher sum assured.
In order to compare, we have chosen the same as in the Benefit illustration.
All the options are chosen similar to the PNB Metlife Benefit illustration.
Assumptions:
The premium for Pure Term Policy: Rs. 3,600
Balance amount for Investment: Rs. 46,400 (Invested in PPF / ELSS)
Total annual cash outflow: Rs. 50,000
The balance amount is invested in either PPF or ELSS depending on the risk appetite of the investor.
The PPF has a lock-in period of 15 years, so the minimum subscription is paid in the last 5 years.
| Term Insurance + PPF | Term insurance + ELSS | ||||
| Age | Year | Term Insurance premium + PPF | Death benefit | Term Insurance premium + ELSS | Death benefit |
| 31 | 1 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 32 | 2 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 33 | 3 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 34 | 4 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 35 | 5 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 36 | 6 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 37 | 7 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 38 | 8 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 39 | 9 | -50,000 | 5,50,000 | -50,000 | 5,50,000 |
| 40 | 10 | -47,500 | 5,50,000 | -50,000 | 5,50,000 |
| 41 | 11 | -500 | 5,50,000 | 0 | 5,50,000 |
| 42 | 12 | -500 | 5,50,000 | 0 | 5,50,000 |
| 43 | 13 | -500 | 5,50,000 | 0 | 5,50,000 |
| 44 | 14 | -500 | 5,50,000 | 0 | 5,50,000 |
| 45 | 15 | -500 | 5,50,000 | 0 | 5,50,000 |
| 46 | 16 | 0 | 5,50,000 | 0 | 5,50,000 |
| 47 | 17 | 0 | 5,50,000 | 0 | 5,50,000 |
| 48 | 18 | 0 | 5,50,000 | 0 | 5,50,000 |
| 49 | 19 | 0 | 5,50,000 | 0 | 5,50,000 |
| 50 | 20 | 0 | 5,50,000 | 0 | 5,50,000 |
| 51 | 21 | 13,68,810 | 26,05,604 | ||
| IRR | 6.60% | 10.92% | |||
| IRR | Sum Assured | Maturity Value | |
| PNB MetLife Guaranteed Savings Plan | 4.51% | 5,56,917 | 9,98,992 |
| Term Insurance + PPF | 6.60% | 5,50,000 | 13,68,810 |
| Term Insurance + ELSS | 10.92% | 5,50,000 | 26,05,604 |
It is evident from the above analysis of the comparison between the other alternate investments IRR and the policy IRR that the PNB MetLife Guaranteed PNB Metlife Guaranteed Savings Plan is not beneficial to the investor in the long run as it does not yield inflation-beating returns like PPF or ELSS with the same amount invested in the policy.
Whereas investment in the combination of Pure Term Insurance with PPF or ELSS will give you a better return on investment in the long term.
Final Verdict:
Through this PNB MetLife Guaranteed Savings Plan, you may want to secure your future with guaranteed returns.
But this corpus will not be sufficient to meet any of your life’s financial goals.
Also, the life cover provided by the PNB MetLife Guaranteed Savings Plan is not adequate to secure your family’s future.
It would be helpful to your financial goals and the security of your family if you keep your investments and your insurance separate.
Alternatively, you can choose your chosen investment vehicle based on your risk appetite & time horizon of your financial goals.
Investing in either PPF or ELSS can give you an inflation-beating return & help you to achieve your life’s financial goals without any compromise.
Whereas a Pure term policy can protect your loved ones financially in the case of your absence.
It is crucial to make wise money choices to keep yourself and your family financially safe.
If you have any comments or questions, write them in the comment box below.
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